Croydon London Borough Council v Kalonga [2022] UKSC 7

A local authority sought possession of a flexible secure tenancy property during the fixed term without seeking forfeiture. The Supreme Court held that the statutory secure tenancy regime does not diminish a tenant's contractual security, and landlords must either obtain a termination order in lieu of forfeiture or exercise an available break clause before seeking possession on statutory grounds.

Facts

Croydon London Borough Council granted Ms Kalonga a flexible secure tenancy for a fixed term of five years from 25 May 2015. In August 2017, approximately two years into the term, Croydon served notice of intention to seek possession on grounds of rent arrears and anti-social behaviour. Croydon expressly stated it was not relying on forfeiture to terminate the tenancy, maintaining it could seek possession directly under the Housing Act 1985 without first terminating the fixed term.

Procedural History

The case was transferred to the High Court for determination of preliminary issues. Tipples J held that the tenancy agreement contained no forfeiture provision and dismissed Croydon’s claim. The Court of Appeal dismissed Croydon’s appeal, holding that termination in lieu of forfeiture was the only way to end a fixed-term secure tenancy early. The fixed term expired by effluxion of time on 24 May 2020 during proceedings.

Issues

The key issues were: (1) whether a secure fixed-term tenancy can only be terminated early through forfeiture (or termination in lieu of forfeiture under section 82(3) of the Housing Act 1985); and (2) whether Ms Kalonga’s tenancy agreement contained a provision for forfeiture.

Judgment

Lord Briggs, delivering the unanimous judgment, held that the 1980 and 1985 Acts do not detract from the security of tenure enjoyed by a secure tenant under the terms of a fixed-term tenancy agreement. However, he rejected the Court of Appeal’s conclusion that termination in lieu of forfeiture was the only method.

The key to this conclusion lies in close attention to section 82(1)… The latter phrase assumes that, apart from the Act, the fixed term tenancy could at the relevant moment in time be brought to an end by the landlord under the terms of the tenancy agreement. It is framed in negative terms, as a prohibition upon what the landlord could otherwise then lawfully do, not in enabling terms, so as to create a right of termination which did not then otherwise exist.

Lord Briggs determined that a tenancy is only “subject to termination by the landlord” within section 82(1)(b) when a provision for early termination has actually become exercisable. Thus, where the only available early termination provision is forfeiture, the landlord must seek a termination order under section 82(3), preserving the tenant’s right to seek relief from forfeiture.

Forfeiture Clause

On the second issue, Lord Briggs disagreed with the lower courts, holding that Ms Kalonga’s tenancy agreement did contain forfeiture provisions. He applied the test from Clays Lane Housing Co-operative Ltd v Patrick:

a right to determine a lease by a landlord is a right of forfeiture if (a) when exercised, it operates to bring the lease to an end earlier than it would naturally terminate; and (b) it is exerciseable in the event of some default by the tenant.

The provisions enabling Croydon to seek possession for breach of tenancy conditions fell within this definition.

Implications

This judgment clarifies that the secure tenancy regime adds to, rather than replaces, tenants’ existing contractual and proprietary security rights. Landlords cannot bypass forfeiture protections merely by seeking statutory possession orders on default grounds. Fixed-term tenants retain meaningful security beyond that of periodic tenants, including the right to seek relief from forfeiture. The decision provides important guidance for public sector landlords on proper termination procedures.

Verdict: Appeal allowed in part. The claim was correctly dismissed because Croydon had not sought termination in lieu of forfeiture, but the declarations made by the lower court were only partly correct. The tenancy agreement did contain forfeiture provisions, and Croydon could have sought a termination order under section 82(3) before the fixed term expired.

Source: Croydon London Borough Council v Kalonga [2022] UKSC 7